Black Money Current Affairs - 2020
Union Cabinet approves Agreement between India and Samoa for exchange of information with respect to Taxes
The Union Cabinet has given its approval for signing and ratification of Agreement between India and Samoa for the exchange of information with respect to Taxes.
It will help to stimulate the flow of exchange of information between India and Samoa for tax purposes which will help curb tax avoidance and tax evasion.
Key features of agreement
- Enables competent authorities of both countries to provide assistance through exchange of information with respect to Taxes
- Information received under agreement will be treated as confidential and may be disclosed only to persons or authorities including administrative bodies or courts.
- Information will be disclosed to any other person or authority or jurisdiction with the prior written consent of the information sending country.
- Provides for Mutual Agreement Procedure for agreeing on procedures or for resolving any difference or under the Agreement.
- The Union Government under section 90 of the Income Tax Act, 1961 is authorized to enter into an Agreement with a foreign country with respect to Taxes
- It is mainly for exchange of information for the prevention of avoidance or evasion of income-tax chargeable under the Income-tax Act, 1961.
- Negotiations for Agreement were finalized between India and Samoa in June, 2016 and both countries have agreed on the text of the Agreement.
Tags: Black Money • Cabinet Decisions • National • Taxation
The Union Cabinet approved a revised Double Tax Avoidance Agreement (DTAA) and the Prevention of Fiscal Evasion with respect to Taxes on Income between India and Cyprus.
The revised DTAA provides for source-based taxation of capital gains on transfer of shares instead of one based on residence.
Thus, it is considered as a major step in the fight against tax evasion, round tripping and base erosion/profit shifting. It also allows India to have the right to tax capital gains arising in India.
It further removes distortion caused by the provisions in the earlier treaty for residence-based taxation for the sake of avoiding tax.
India and Cyprus had signed DTAA in 1994. Cyprus is a major source of foreign funds flows in India. From April 2000 till March 2016, India received foreign direct investment (FDI) to the tune of Rs 42,680.76 crore from Cyprus.
Cyprus is considered a major haven for money laundering, round-tripping, and profit-shifting. The revised DTAA assumes significance coming soon after the signing of the revised pact with Mauritius.
What is Double Taxation Avoidance Agreement (DTAA)?
A DTAA is a bilateral economic agreement between two nations that aims to avoid or eliminate double taxation of the same income in two countries. It is also referred to as a Tax Treaty.